Almost every major land based casino trades on the public market or stock exchange. While they have seen solid growth in recent years, their stock prices have been tumbling as of late. With investors having doubts about the American economy and people just not spending like they used to, companies that offer luxury products are not doing so well.
While some of the larger casinos continue to report decent earnings, none are meeting the expectations of analyst of the stock exchange. This is in part due to my previous statement in regards to the economy, but also due to increased operation costs and expansion costs. Major casinos have been trying to grow their market by building casinos in other countries, with China playing a large part in this. These lavish casinos ultimately cost billions to build and can put a severe dent into their bottom line. The overall growth of the company will get better in the long run, but for short term investors, not meeting quarterly estimates is a sign not to invest.
LVS stock (Las Vegas Sands)
Sands casino and resorts is the largest casino operator in the world. However their stock has plummeted the last several weeks with concerns about their overseas operations. Sands have put so much into their Chinese markets and investors were once optimistic about their stock. With the Chinese economy slowing, so are investors. As of August 10th 2012, LVS stock sold at $39.89 a share. This is actually up about 1% for the year, but nowhere near expectations.
MGM trades at $9.70 as of August 10th 2012 which is down about 6% for the year. Recent reported losses have made the stock unwanted by many investors. These losses are contributed mainly to their Chinese casinos and certain tax provisions, so their future does look a little brighter than most.
Zynga is the company that brings us Facebook games such as Cityville, Farmville and of course Zynga poker. Their recent interest in entering the casino market has spurned investors to take notice. Having only been trading publicly for 2 quarters, Zynga Poker Stock has reported losses in earnings both of these quarters. While total revenue is up, losses continue to mount.
Last quarter they reported losses of 22.8 million and revenue reports fell way short of investor estimates. Their stock price is down almost 40% from its initial price and the future isn’t looking too bright with its fellow Facebook stock going downwards as well.
All casinos to report growth in revenue, but overall costs are dampening their profits. It’s tough to say how they will fair in the future and whi9ch ones will survive at this point. They seem to putting their hopes and dreams in the once huge Chinese market, but putting too many eggs in one basket in never a good idea. Some are looking to expand in other countries such as Spain which will be interesting to see how that turns out. But overall, casino stocks are not worth the risk at this moment.